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Today's Top News
UN Meet May Short-Change the Poor
BRUSSELS - As United Nations members gather for talks on how best to end the global financial crisis, anti-poverty campaigners fear that instead of addressing poverty in the developing world, governments will work to prop up financial structures.
Three-day talks on the 'World Financial Crisis and its Impact on Development' begin in New York Wednesday after a delay due to "bickering" amongst participants.
Soren Ambrose, development finance coordinator at the international anti- poverty agency ActionAid tells IPS that it is the most developed countries that are undermining proposals for a more global solution to the crisis.
"We are seeing this opportunity pass us by," says Ambrose. "There have been many innovative proposals put by the G77 (the group of developing countries within the UN), but it seems most of these have been pushed away. By Friday, I fear we will see, in very careful language, that these proposals have been omitted from the final text."
The reason for this is simple, says Ambrose: the big countries want to protect their financial centres like London and Frankfurt.
"Generally, the countries opposing a global deal have a big stake in the financial market, like the UK with the City of London (the financial district of London). The more international cooperation there is between all nations, the harder it is for them to offer special incentives for investors. The more global accountability there is on issues such as tax havens, the less opportunities there are for countries to bend the rules."
Following the World Bank's annual Global Development Finance report published Monday, these issues have become even more urgent. The report calls for regulatory reforms, as well as development assistance for the world's least developed countries.
Ambrose says these appeals may fall on deaf ears at the UN, and that proposals for new methods of raising revenue and accountability, such as carbon taxes and a tax on certain financial transactions, will fall by the wayside.
Whatever kind of stimulus package emerges, says Ambrose, it is important that developing nations create their own alternatives to the current financial norms, and that these are incorporated into self-reliant national development plans.
"As for any stimulus packages that emerge, each national government has to decide for itself what to do, but also it is important to note that the quickest way to achieve success is for a global stimulus package, not simply a country-by-country approach," says Ambrose. That would only lead to further divisions within the developing world, he says.
There have been some suggestions that a compromise has been worked out, but optimism is not high that any such compromise will favour developing nations.
The Global Economic Council of the G77 (a permanent economic body) has reportedly put forward proposals including the setting up of an international bankruptcy court. "I am almost certain that none of these will be accepted," says Ambrose. Such a move, he said, would upset the current standing of the dollar as the global reserve currency.
"Any practical reforms like these that might end the dependence on the dollar as the reserve currency would not be acceptable. It would expose the vulnerability of the system. And global regulations on tax rules, for instance, that might stop tax havens, would also not be entertained."
One financial mechanism that NGOs such as ActionAid are pushing for is a better use of Special Drawing Rights (SDRs), the reserve asset of the International Monetary Fund (IMF), which provide resources at low cost and for transfers from wealthy to developing countries.
SDRs, says Ambrose, are the easiest way to mobilise resources for developing countries, and protect the world's most vulnerable from the global financial crisis.
On Jul. 13, following approval by the U.S. Congress, the IMF is set to announce a 250 billion dollars fund under the SDR scheme. The problem, however, is that SDRs are currently apportioned according to individual shareholding within the IMF.
"Which means that, in effect, about two-thirds of the money will go to rich countries that don't need these kind of resources," says Ambrose. "This is a situation that has to be changed."